Shanghai readies charity transparency rules

Shanghai Daily, December 21, 2011

Charity organizations that fail to publicize the financial condition of their donation funds will face penalties of up to 30,000 yuan (US$4,730), and the fine may go up in the law's final version, based on arguments made by many legislators yesterday.

Amid repeated scandals concerning China Red Cross branches, Shanghai legislators are now writing a local regulation to enhance the government monitoring and transparency of public-welfare fund-raising organizations, including charitable groups.

According to the draft, local charitable groups must publicize their spending and asset details at least twice a year in an effort to boost transparency. They will also be required to publicize their audited financial report of the previous year before June 30 each year.

A spate of scandals that took place this year elsewhere in China, involving public welfare fund-raising groups including the China Red Cross Society, has tarnished the credibility of charities. Public donations have plunged this year, according to reports released by some major charitable groups.

In June, Guo Meimei, 20, claimed she was the manager of the Red Cross Commerce and flaunted her lavish lifestyle online, raising public suspicion that the Red Cross misused donations.

Red Cross branches in several cities, including Shenzhen, reported that donations have plunged since the scandal.

Meanwhile, under the rules being drafted, the fund managers must return donations collected in an illegal manner and will face penalties of up to three times the value of the illegal collections.

Among the illegal ways of fund-raising will be asking students to make annual donations to the Red Cross Society under pressure of the school authority, which was recently reported to have taken place in some Chinese cities.

In October, parents in several big Chinese cities, including Shenyang, Jinan and Xi'an, complained that their children had been ordered by primary and middle schools to buy membership in the China Red Cross. The "membership fee" charged for the Red Cross was 2 yuan or 5 yuan a year, depending on the school, according to parents.

Meanwhile, the Shanghai government will set up and operate an open online platform offering the public free access to information on local charitable fund-raising groups, according to the draft. The public can also directly report problems and raise doubts concerning fund-raising activities through the online platform to provide data for government investigations.